These days it seems that there is a loyalty program for just about everything. Your credit card company offers it. So does your gas station, grocery store, even your local coffee shop and with good reason. Loyalty and reward programs offer a winning combination for both the member and the program that offers it. The member is rewarded for their continued patronage and the company/program receives continued revenue from the repeat customer. But how often have members found themselves wondering just how many points they’ve accumulated and what they can redeem for?

The loyalty industry has taken notice and is working to make redemption easier as well as offer items that are of value to the consumer. Gift cards in particular have made an enormous impact on this industry by providing loyalty and reward programs with an item that offers a greater amount of choice and variety for the consumer. Their popularity has surpassed any other reward, taking in 57% of all credit card reward point redemptions(1).  Long gone are the days when you received a catalogue with redemption items that didn’t exactly fit what you were looking for. A gift card on the other hand, allows you to pick and choose the items that you waht to purchase. After all, the privilege of redeeming for rewards is the reason customers join a loyalty program in the first place.

Many are seeing the growth of gift card popularity as a way to re-engage customers who are enrolled in a loyalty program but never redeem their points. In a study conducted by Maritz, it was found that nearly half of all consumers have never redeemed their loyalty points even though 36% of the cardholders have been in reward programs for over 5 years (2).  Situations such as this have forced marketers to become more innovative and creative in their reward offerings with more of a focus on flexibility and easier redemption. Statistics show that the more customers redeem, the more valuable they become to the company sponsoring the loyalty program and that multiple redeemers outspend non-redeemers on an average of 3:1 (3).   While reward miles used to be the de facto currency that members redeemed for free air travel once they had accumulated a certain threshold, nowadays gift cards offer the consumer the choice to shop at retailers for merchandise of their own choice.

Gift cards can also be used as a key incentive to encourage members to sign up for a loyalty or reward program (4).  In a recent study conducted by Hbc, it was found that an overwhelming 100% of participants prefer a loaded gift card over anything else when receiving a gift with purchase. This outweighed the desire for other products or even discounts. However, the battle doesn’t end there. Credit card loyalty programs are always looking to increase commitment from the card holder to continue spending while working toward a reward. Visa found that committed cardholders put as much as 75% of their spend on a chosen card (2).

A successful loyalty program should offer its members rewards that are meaningful and attainable. As gift cards climb in popularity, they continue to evolve to add value to the loyalty member who opts to redeem for them. Gift cards provide that attainable reward that can be reached without having to accumulate points for a long period of time and they carry a high perceived value to the end consumer. Choice, flexibility and the ability to redeem for rewards faster are just some of the benefits that make gift cards a winning addition to any loyalty program.